Gold prices in India hit a fresh record high of Rs 50,000 per 10gm in Mumbai's retail market on Wednesday tracking the spike in coronavirus cases worldwide, falling rupee and rising demand for yellow metal.
Concerns over the economic impact of rising coronavirus infections in many countries, especially in the two largest economies-US and China have driven investment inflows into safe-haven assets like gold.
Gold prices have risen by 25% since the beginning of 2020. Traders said India recording highest spike of Covid-19 infected cases in a day despite weeks of lockdown has also led the price for the risk-averse asset to reach 50K mark in the domestic retail market.
Gold August Futures on Multi Commodity Exchange traded lower on profit-booking tracking losses from international markets. Gold August Futures fell by Rs 75 at 48,188 today, after rising to the intraday high of Rs 48,982 per 10 gm on Wednesday. The precious metal today opened at Rs 48,174. per 10 gm and also touched a day's high of Rs 48,223 per 10 gm against the previous closing of 48,267 per 10 gm.
Overseas, gold price slipped from near 8-year high over the news of potential coronavirus vaccine and better US economic data. Spot gold fell 4.5% to $1,768 per ounce today, after nearing an eight-year high at $1,800 per ounce on Tuesday night.
The rise in price of the yellow metal has continued even though more and more countries are relaxing lockdown restrictions. Besides worries of the second wave of COVID-19, geopolitical tensions in India-China borders, US-China trade deal and uncertainties around the Hong Kong issue have also led to the demand for the safe-haven asset.
Further, even after the 50K breakout, experts suggest gold prices will continue their upward ride as fear of the second wave of a pandemic could lead to lockdown again. Value of gold assumes more importance during times of recession and uncertainty.
Commenting on the surge in gold prices, Hareesh V, Head Commodity Research at Geojit Financial Services said, "Escalating geopolitical tensions, concerns of a quick global economic recovery and a weak US dollar will continue to lift the demand for gold. However, investors may take a cautious stance ahead of the key US employment data."
On its technical outlook (London spot), he added," As long as prices stay above $1710, we can expect the bullish outlook to continue in the counter. The immediate downside reversal point is $1664".
"Going ahead, any escalation in the ongoing geopolitical tensions or any negative news regarding coronavirus will boost safe-haven demand for gold and once it crosses and sustains above Rs 48,600, we can expect a surge towards Rs 49,750-50,600. Meanwhile, dips will find buying support until Rs 47,000 holds and prices will again bounce back towards 48,600 levels," said Rahul Gupta, Head of Research - Currency, Emkay Global Financial Services.
Worldwide, the number of cases linked to COVID-19 crossed 1.06 crore, while the death toll topped 5.15 lakh. In India, the number of infections spiked to 6,04,641, according to the health ministry. The death toll due to the disease rose to 17,834.